Arab Company Tries to Dodge Whistleblower Suit

Trying to sue a company that claims it is based in Kuwait is no easy task. Whistleblower Kamal Mustafa Al-Sultan, himself a Kuwaiti, is learning that lesson after suing Public Warehousing Co KSC in Georgia. The suit has been dragging on since 2005 but now Uncle Sam is jumping in and telling a court that Public Warehousing should stop dragging its feet. The government and whistleblower both argue that the company has had plenty of notice about the suit.

The lawsuit itself is quite interesting. It alleges that the U.S. government was ripped off by Public Warehousing, a company that sells rations to U.S. armed forces.

The lawsuit was original filed not by the government but by Al-Sultan. A Civil War era whistleblower law allows private individuals to file lawsuits in the name of the government in cases involving fraud against taxpayers.

The United States spend an enormous amount of money each year to feed our troops in the Mideast, over $2 billion. Much of that money is pend on local vendors. Al-Sultan owns his own company in Kuwait and has several contracts with the U.S. government. Al-Sultan’s company and Public Warehousing are competitors. Both supply rations to U.S. military bases in the Mideast. Around 2002, the two companies decided to work collaboratively so they could bid on larger contracts.

Shortly after winning a contract, Al-Sultan says that Public Warehousing began illegally marking up the cost of locally sourced food. That meant that U.S. taxpayers were paying more than they should. The contract allowed the companies to buy locally and add a small markup for profit and distribution expenses.

Al-Sultan says he wanted no part of the illegal actions taken by Public Warehousing. He says the partnership between the two companies quickly fell apart. Because the actual contract was in Public Warehousing’s name, Al-Sultan was locked out of any profits and work.

In 2005, Al-Sultan filed a whistleblower lawsuit under the False Claims Act against Public Warehousing Co. The company, however, claims it should not have to answer the lawsuit filed over 10 years ago because it has not been properly served with the summons and complaint.

Serving a company overseas is complicated. Public Warehousing says that service has not been recognized under Kuwaiti law. The U.S. Department of Justice is getting frustrated and asked a federal judge in Georgia to ignore their claims. According to prosecutors, the company has a facility in Georgia and was served pursuant to Georgia law. More importantly, the company’s U.S. lawyer acknowledged receiving the court papers.

The U.S. court has already once acknowledged the government’s then “five-year struggle” to serve the company, a struggle that included, “the failure of the Kuwait Central Authority to comply with service requests, including the refusal to even accept delivery of the United States Central Authority’s communications; and the conduct of the [Public Warehousing] defendants in denying they were properly named in the original complaint.”

In a court filing this week, prosecutors told the court that the crux of Public Warehousing’s argument is not that it has not been served; instead, the company argues that it has not been served enough.

Whistleblowers often suffer intense frustration by the length of time it takes to investigate and prosecute wrongdoers. Filing a claim against a foreign company involves even more delays, especially if the foreign government seemingly cooperates with the wrongdoers.

As this case points out, whistleblower claims against foreign companies are possible. Of equal importance, you can also receive a whistleblower award even if not a U.S citizen or resident.

Whistleblower Awards and the False Claims Act

The federal False Claims Act (also called a qui tam lawsuit) dates back to the U.S. Civil War. Under the Act, whistleblowers with inside information about fraud involving public funds or programs can receive a percentage of whatever the government collects from the wrongdoers. Depending on whether the government handles the prosecution or allows the whistleblower’s own lawyer to do affects the amount of the award, whistleblower awards vary between 15% and 30%.

There are both “public disclosure” and “first to file” bars in the law meaning if you are interested in receiving an award, don’t waste any time in contacting a lawyer and filing your lawsuit.

Awards are earned by filing a sealed lawsuit in federal court. While the government investigates, the case remains secret.

MahanyLaw – America’s Whistleblower Lawyers

The qui tam lawyers at MahanyLaw have helped whistleblowers collect tens of millions of dollars. Our mission is to stop fraud, protect our clients from retaliation and obtain the maximum possible award. There is never any fee for our services unless we first recover money for you.

Want to learn more? Contact attorney Brian Mahany at *protected email* or by telephone at (414) 704-6731 (direct). All inquiries protected by the attorney – client privilege and kept confidential. Not ready to call? Visit download our 11 step guide to blowing the whistle. (You don’t need to give us your name or email address to access the information. )